SHIPMAIN Cost Benefit Analysis

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SHIPMAIN Cost Benefit Analysis
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CBA Process Flow
Output from Tech Assessment
NDE Identification of New Pkgs to SME analyst
Submitter provides Cost Data/Backup Information
to SCD
NDE Maps data To CREI Template and calculates
cost metrics (ROI, NPV, Payback)

• SEA017 Check
• All required Data Fields Complete
• Review of SME CBA Comments
• Forward Pkg or
• Return to Submitter w/Comments

Feedback Loop
Forward
Provide Pkg to Decision Board
Forward to Next Phase
Approve
Approval Decision
Update SCD
Disapprove
AFOM
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FAIL Cannot Make Business Case for the ALT Go
History
TE
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Module 3B(R)
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Special CBA Definitions

• ROI (Return on Investment) expressed as a ratio
  of how much return vs. how much invested or when
  the alteration pays for itself e.g
• 2.0 means two dollars returned or realized for
  every dollar initially invested in the alteration
  or modification
• Must be expressed along with a Payback period
  to be meaningful
• Negative ROI The ship change never pays for
  itself
• Cash outflow gt Cash inflow
• Payback Period The period of time it will take
  for the investment to be realized
• NPV (Net Present Value) The projected value of
  a dollar in a future year that is adjusted
  (discounted vs. inflation) back to the present
  year (todays cost)
• Negative NPV means that cost of the alteration is
  greater than the savings realized
• Negative cash flow
• Typical for alterations that might provide a
  greater war fighting benefit, but not an economic
  benefit
• A negative NPV will always drive a negative ROI
• TOC (Total Ownership Cost) The total acquisition
  and life-cycle cost throughout the life of the
  program (cradle to grave)

Module 3B(R)
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The alert window lists all required information
needed for CBA that is required BEFORE the SCD
is Submitted
To activate sheet, the FY corresponding to
planned execution and Save must be selected
Module 3B
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Back to SCD returns to the SCD ensure Save
is selected before returning
Module 3B